# How allocation is computed

This methodology callout is the inline answer Gildi provides whenever a capital call allocation is shown to a General Partner (creating the call) or to a Limited Partner (receiving the call). It lives next to the allocation column on every relevant screen and inside every capital call notice PDF.

## The headline formula

For any capital call, each Limited Partner's allocation is calculated as follows:

> Each Limited Partner's allocation equals their signed commitment divided by the sum of all currently active commitments, multiplied by the total call amount.

This is **committed-capital-pro-rata** allocation: every Limited Partner draws down at the same rate as every other Limited Partner, proportionate to their commitment. This is the industry default per ILPA Model LPA §5.1.4 and is the allocation method assumed by virtually every closed-end private equity fund.

## Worked example

Three LPs in a fund. The GP calls €5,000,000.

| Limited Partner | Commitment (EUR) | Commitment share | Allocation (EUR) |
| --------------- | ---------------: | ---------------: | ---------------: |
| Investor A      |        5,000,000 |          25.00 % |        1,250,000 |
| Investor B      |        7,500,000 |          37.50 % |        1,875,000 |
| Investor C      |        7,500,000 |          37.50 % |        1,875,000 |
| **Total**       |   **20,000,000** |     **100.00 %** |    **5,000,000** |

Each Limited Partner's allocation rounds to two decimal places. Gildi enforces a rounding-residue rule: if the sum of rounded allocations doesn't exactly equal the total call amount, the residue (typically ≤ €0.03) is absorbed by the largest-commitment Limited Partner. This keeps the total amount called equal to the amount received when Limited Partners pay to the cent.

## Equalization adjustments

When a Limited Partner is admitted to the fund **after** the first close (a subsequent close), they are economically treated as if they had been in the fund since day one. Gildi applies an **equalization true-up** so:

1. The new Limited Partner pays their pro-rata share of every prior capital call as if they had been a Limited Partner at that time, **plus**
2. Interest on those catch-up amounts, accruing from each prior call's drawdown due date to the new Limited Partner's admission date.

The catch-up amount and interest are itemized per historical drawdown. This is more transparent than the older single-interval approximation (which over-estimated interest by treating every drawdown as if it happened at the previous closing date). Real fund administrators itemize.

Interest accrues using the fund's **day-count convention** — typically `30/360` or `actual/365` — declared in the fund's subscription documents. For each historical drawdown, the interest is calculated by multiplying the catch-up principal amount by the annual interest rate and by the fraction of the year between the drawdown due date and the new Limited Partner's admission date, using the fund's declared day-count convention.

The new Limited Partner sees, in their equalization notice:

* Each historical drawdown that triggers a catch-up
* The principal amount (their pro-rata share of that drawdown)
* The day-count fraction and number of days
* The interest amount per drawdown
* The total equalization amount due

## Recallable adjustments

A capital call can recall amounts the General Partner previously distributed back to Limited Partners that retained recall rights. In that case the allocation formula applies to the **net new amount called** (after subtracting recallable distributions still available per Limited Partner). See [the recallable methodology callout](/methodology/_recallable.md) for the running-balance math.

## Edge cases Gildi handles explicitly

1. **Excused Limited Partners.** If a Limited Partner has been excused from a specific investment (per their side letter), their commitment is excluded from the total active commitments for that call. The remaining Limited Partners absorb the excused Limited Partner's share pro-rata.
2. **Defaulted Limited Partners.** If a Limited Partner defaulted on a prior call (status `DEFAULTED`), they are excluded from new allocations until the default is cured. The non-defaulting Limited Partners absorb the shortfall — Gildi flags this on the General Partner's allocation preview before the call is sent.
3. **Single-currency funds only.** Gildi enforces single-currency at the fund level. A fund denominated in EUR may not include commitments denominated in USD or GBP. Mixed-currency funds will be supported in a later phase; until then, the platform rejects mixed-currency commitments at fund-creation time.
4. **Rounding residue.** As above: any sub-cent residue from per-Limited Partner rounding is absorbed by the largest-commitment Limited Partner, never silently dropped.

## What this **does not** cover

* The waterfall on **distributions** (return of capital + preferred return + carry split). See [the recallable methodology callout](/methodology/_recallable.md) for the recallable side and the [distributions overview](https://github.com/manuelbenitez/gildi-monorepo/blob/docs-published/waterfall/waterfall.md) for the distribution mechanics.
* Management fee allocation — covered separately in [the fees methodology callout](/methodology/_fees.md).
* The legal mechanics of issuing a capital call notice — see the [Send notice](https://github.com/manuelbenitez/gildi-monorepo/blob/docs-published/capital-calls/gp/send-notice.md) how-to for that.

## Standards cited

* **ILPA Capital Call Notice Standard 2.0** — the format Gildi follows for the notice PDF and for the per-Limited Partner fields shown in the portal.
* **ILPA Model LPA §5.1.4** — pro-rata allocation default + equalization interest accrual mechanics.

## Audit trail

Every capital call allocation Gildi computes is persisted with:

* The exact commitment basis used (which Limited Partner commitments were active at call time, which were excused, which were defaulted)
* The total commitment denominator at the moment of computation
* The rounding residue and which Limited Partner absorbed it
* For each Limited Partner, their commitment, share %, raw allocation, and rounded allocation
* For equalization adjustments: the full per-drawdown catch-up + interest workings (principal, rate, day-count, days, interest)

This data is captured in the capital call record and is rendered into the capital call notice PDF. Auditors reviewing the fund's books can reconstruct any allocation from these stored fields without re-running the math.


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